9911796707
TMI Blog1963 (3) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... oner a renewal of registration before the 31st of March, 1963, and 31st of March, 1964, respectively. The first petitioner firm is a partnership firm consisting of the second and the third petitioners as its partners. This firm was formed from the first day of Samvat Year 2012, which is the relevant previous year for the assessment year 1957-58. The firm has succeeded to a proprietary concern of the second petitioner who carried on business in the name of Radhakrishna Brijlal Rungta. The partnership deed embodying the partnership is dated 5th April, 1956. On or about 1st of May, 1956, the first petitioner firm filed its application for registration of the firm for the assessment year 1957-58. According to the petitioners after the public notice under section 22(1) had been issued in April, 1957, for the assessment year 1957-58, individual notices under section 22(2) for the said assessment year were served on the first petitioner firm, the first of them, on the 27th September, 1957, by the 7th Income-tax Officer, C-II Ward, Bombay, and the second on the 4th December, 1957, by the 3rd Income-tax Officer, C-II Ward, Bombay. The return for the said assessment year 1957-58 was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 22(4) was served on the first petitioner calling upon them to produce their books of account in support of their return for the assessment year 1957-58, but subsequently, by his letter dated 16th March, 1962, the respondent informed the first petitioner that, inasmuch as the return filed by the first petitioner was an invalid return as explained in his earlier letter dated 30th December, 1960, no further action was necessary. The first petitioner then applied to the Inspecting Assistant Commissioner of Income-tax, B-Range, Bombay, and requested him to direct the respondent to proceed with the assessment for the assessment year 1957-58 immediately. Subsequently thereto the respondent took up the assessment of the petitioner firm for the assessment year 1957-58 and completed the said assessment before the 31st of March, 1962. The first petitioner firm also was granted registration certificate for the said assessment year. Thereafter, on 13th June, 1962, the first petitioner requested the respondent to take up the assessment for the assessment years 1958-59 and 1959-60 for which it had already filed its loss returns. On 4th January, 1963, the respondent informed the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e further prejudice to them. The petitioners, therefore, say that they are entitled to a writ in the nature of mandamus or other appropriate writ, order or direction requiring the respondent to perform the statutory duty of taking up the returns filed by the first petitioner firm and proceed to assess them. The petitioners also complained that since they have made applications to the department under section 26A for the renewal of their registration and since those applications are in accordance with law, the department was bound to consider the said applications and pass necessary orders on them. No such orders have been passed on their applications for renewal of registration by the respondent. He should, therefore, be called upon by an appropriate writ, order or direction to perform his statutory duty in connection with the said applications for renewal of registration also. In the affidavit in reply to the petition filed by the respondent, the position taken by him is that under section 22 of the Indian Income-tax Act and in view of the specific provisions contained in section 22(2A), no voluntary loss return could be filed by an assessee except in the manner provided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to the first question, which is involved in the present petition, viz., whether the voluntary loss returns, which have been submitted by the 1st petitioner firm for the assessment years 1958-59 and 1959-60 are good and valid returns on which the Income-tax Officer was bound, under the Act, to proceed with the assessment, the submission urged on behalf of the 1st petitioner firm is that a return, even though it be a return showing income less than the taxable income or a return showing loss, is a good and valid return under the Act. Such a return under section 22(3) is capable of being filed at any time before the assessment is made. If such a return is made, the Income-tax Officer is, under section 23, bound to take up the said return and proceed to pass an appropriate order as is contemplated under the provisions of the Act. It is contended on behalf of the petitioners that if a good and valid return is filed before the Income-tax Officer he is bound to proceed with it to make an assessment and there is no provision in the Act, which enables him not to consider the said return and merely file it. The contention of the revenue, on the other hand, is that section 22 before its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be filed only within the time allowed by it. It is, therefore, argued on behalf of the revenue that in the present case the loss returns, which admittedly did not comply with the provisions of sub-section (2A) were not good and valid returns, which were capable of being entertained and proceeded on to assessment. Now, the view that section 22 of the Indian Income-tax Act as it stood before its amendment in 1953 did not provide for submitting a voluntary return of loss and, therefore, if such a voluntary return of loss was filed, the Income-tax Officer was not required to take action on the same and the assessee had no right to insist that action should be taken on such a return, was undoubtedly taken by some of the High Courts and notably by the Calcutta High Court in Commissioner of Income-tax v. Govindalal Dutta [1958] 33 I.T.R. 630. It was held in that case that voluntary returns, which showed a loss were not returns at all and the Income-tax Officer was not required to make any assessment on them. The Madras High Court in O.M. Ahamed Sahib v. Commissioner of Income-tax [1952] 22 I.T.R. 87 had also observed that if the assessee carried on only one business and that busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice under section 22(1) of the Income-tax Act can, under section 22(3), be filed at any time before assessment and for this there is no limit of time. After having referred to the divergence of the views between the Bombay and the Calcutta High Courts, their Lordships observed: The Calcutta view, as shown above, really proceeds upon the wording of section 22(1). It lays down that the public notice requires only persons having an income above the taxable limit to make a return. A person who has no such income need not make a return, and if he does make a return, it is not a return which need be considered, being not a return in law. It is a little difficult to understand how the existence of a return can ignored, once it has been filed. A return showing income below the taxable limit can be made even in answer to a notice under section 22(2). The notice under section 22(1) requires in a general way what a notice under section 22(2) requires of an individual. If a return of income below the taxable limit is a good return in answer to a notice under section 22(2), there is no reason to think that a return of a similar kind in answer to a public notice is no return at al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That sub-section has provided that a voluntary loss return will have to be filed by the assessee within the time specified in the general notice given under sub-section (1) or within such further time as may be allowed by the Income-tax Officer in cases where the assessee has sustained a loss of profits or gains in any year under the head Profits and gains of business, profession or vocation, and such loss or any part thereof would ordinarily have been carried forward under sub- section (2) of section 24, if he wants himself to be entitled to the benefit of the carry forward of loss in any subsequent assessment. In the first place this provision has been made only in connection with the losses, which are entitled to be carried forward under the provisions of sub-section (a) of section 24. By the said provision, which has been made to apply to certain specified cases, it cannot be implied that the right of the assessee to file a loss return, if it existed prior to the amendment in other cases, was sought to be done away with. As we have already pointed out, before the amendment of the section, it is clear, in view of the decision of the Supreme Court, that a voluntary return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is not the position in the present case. He points out that the petitioners have alleged in their petition that the refusal of the Income-tax Officer to consider the returns filed by the 1st petitioner and passing the necessary orders thereon has greatly prejudiced the petitioners and is also likely to further prejudice them. They have stated that the petitioner firm was a registered firm, which was granted registration during the previous assessment year 1957-58. It has applied for renewal of registration for the assessment years 1958-59 and 1959-60 also and according to the petitioner firm. it is entitled to such registration during these years also. The assessment of the first petitioner firm, therefore, when made will require the Income-tax Officer malting the assessment to apportion the loss between the partners and the partners will be entitled to have the benefit of setting off that loss in their individual assessments in the said year at any rate. The failure of the Income-tax Officer to make the assessment of the petitioner firm deprives the second and third petitioners of the benefit of that assessment. There is, therefore, prejudice caused to the petitioners from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and would only be filed. He was in our opinion, under a duty to take up the said returns and consider then in accordance with law. The petitioners, therefore, will be entitled to a writ in the nature of mandamus requiring the respondent to take up the returns filed by the first petitioner firm and complete the assessments thereon before the 31st of March, 1963, and 31st of March, 1964. respectively. Coming to the other writ, which has been prayed for by the petitioners, in view of the affidavit of the respondent that there are at present no applications for renewal of registration filed on behalf of the first petitioner firm, we do not think that it will be possible to issue a writ such as is prayed for by the petitioners requiring the respondent to consider the said renewal applications. The petitioners have stated that they have forwarded the renewal applications to another officer of the same ward at the suggestion of the predecessor of the respondent himself, who had indicated to them that their papers were being forwarded to the said Income-tax Officer. The petitioners, therefore, say that they cannot be blamed if the renewal applications made by them are not before the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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